Examining Real Estate Choices: What Purchasing Power Does the Median Income Have in Major US Cities?

Interest rates in the United States have surged to levels not seen since 2001, with the overnight federal funds rate standing at 5.33%. This has led to heightened borrowing expenses for individuals looking to purchase homes. In addition to the escalating mortgage payments, American homebuyers are facing with an upward trend in home prices. As per the most recent data from the National Association of Realtors, the median national home price in August reached $407,100, marking a year-over-year increase of 3.9%.

As affordability becomes more constrained, individuals with median incomes could encounter challenges affording homes in prominent markets. To assess what those earning the median income can affordable purchase, Zoocasa examined median incomes in 20 of the largest U.S. metropolitan areas based on U.S. Census data. The analysis involved calculating the maximum affordability for each city and comparing it to the most recent median home prices in Q2 2023, as reported by the National Association of Realtors.

Home Prices Out of Reach in Every Major Market 

It is difficult for people earning the median income to buy a home in any major city right now, as median home prices are far higher than the maximum that most people can afford. This is especially true in the most popular cities, such as New York and Los Angeles, where the median home price is more than $350,000 more than what a typical person can afford.

Even in San Francisco, the city with the highest median income in the United States at $128,151, buying a home is still out of reach for most people. The median home price in San Francisco in Q2 2023 was $1,335,000, while the maximum that people earning the median income can afford is much less, at $435,717.

Washington D.C. had the second highest median income, at $117,432, but the maximum home price that people earning the median income could afford was $400,010, which is still $228,990 less than the median home price in Q2 2023. Seattle had the third highest median income and the third highest median home price. Buyers in Seattle earning the median income of $106,909 could afford a home up to a maximum of $364,957, while the median home price in Q2 2023 was $793,300.

Buyers Can Find the Greatest Affordability in the Midwest and East Coast

Although the gap between what middle-class earners can afford and the median home price is large in most cities, there are a few areas where it is smaller. Detroit is the most affordable city on our list, with a gap of only $19,079 between the median home price and the maximum home price that people earning the median income can afford. Detroit also has the most affordable median home price on our list, at $265,300, which is nearly $150,000 less than the national median. Additionally, recent data from the Chamber of Commerce shows that Detroit has the most paid-off homes, with two-thirds of homeowners having completely paid off their mortgages.

Middle-class buyers in Baltimore could afford to buy a home priced at $338,527, which is just $61,273 less than the median home price in Q2 2023. In Philadelphia, middle-class buyers are $63,847 shy of the median home price.

Cities where the median home prices fall below the national median include Houston (Houston-The Woodlands-Sugar Land), Dallas (Dallas-Fort Worth-Arlington), Chicago (Chicago-Naperville-Elgin), Atlanta (Atlanta-Sandy Springs-Marietta), and Minneapolis (Minneapolis-St. Paul-Bloomington).

If you’re looking to enter one of these markets, it’s important to speak with a local realtor who can give you specific information and guidance about the local real estate market. Feel free to contact us to discuss your home-buying plans. 

If you're considering entering any of these markets, it's crucial to consult with a local realtor who can provide you with specific information and guidance tailored to the local real estate landscape. Feel free to contact us today to initiate a discussion about your home-buying plans.